Stocks pull back before Federal Reserve meeting, oil keeps dropping

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The statue of George Washington on the steps of Federal Hall overlooks the New York Stock Exchange, right, during a winter storm, Tuesday, March 14, 2017. Global stocks drifted lower on Tuesday as investors looked to the Federal Reserve’s policy meeting for an expected interest rate increase and hints on future hikes. (AP Photo/Richard Drew)

Currency traders work at the foreign exchange dealing room of the KEB Hana Bank headquarters in Seoul, South Korea, Tuesday, March 14, 2017. Asian stock markets drifted in slow trading on Tuesday as investors awaited the outcome of the Federal Reserve’s meeting and a batch of economic and political events later this week. (AP Photo/Ahn Young-joon)

NEW YORK — Stock indexes sank Tuesday after yet another drop in the price of oil dragged down shares across the energy industry. Other areas of the market saw modest losses as investors wait to hear from the Federal Reserve, which began a two-day policy meeting on interest rates.

The Standard & Poor’s 500 index fell 8.02 points, or 0.3 percent, to 2,365.45. The Dow Jones industrial average fell 44.11, or 0.2 percent, to 20,837.37. The Nasdaq composite fell 18.97, or 0.3 percent, to 5,856.82. Two stocks fell on the New York Stock Exchange for every one that rose.

The price of oil has been slipping on concerns that supplies will outweigh demand. It’s dropped from nearly $55 per barrel in late February to $47.72 on Tuesday, down 68 cents, or 1.4 percent. Brent crude, which is used to price international oils, fell 43 cents to $50.92 per barrel in London.

It’s the seventh straight decline in the price of oil. Energy stocks in the S&P 500 fell 1.1 percent, the largest loss among the 11 sectors that make up the index. Marathon Oil fell 52 cents, or 3.3 percent, to $15.32.

Lower oil prices help to curb inflation, and bond yields sank in tandem. The yield on the 10-year Treasury note fell to 2.59 percent from 2.63 percent late Monday. The 30-year yield sank to 3.18 percent from 3.21 percent, while the two-year yield dipped to 1.37 percent from 1.38 percent.

Stocks of smaller companies sank more than the rest of the market. The Russell 2000 of small-cap stocks lost 0.6 percent, double the decline of the S&P 500 index of the largest stocks.

When the Fed finishes its meeting on Wednesday, most economists expect it to raise interest rates by a quarter of a percentage point. It would be only the third increase since the Fed slashed rates to a record of nearly zero in 2008 during the financial crisis.

What investors are likely more interested to hear is what Fed Chair Janet Yellen says about the pace of future increases. The job market, stock prices and other economic indicators have picked up momentum in recent months, which raises expectations for more increases.

In the past, expectations for higher rates may have spooked stock investors, because more-expensive borrowing can slow the economy. That’s not happening this time.

“We’re in an environment now where the market is no longer afraid of Fed hikes because the perception now is the Fed is hiking for the right reasons,” said Jon Adams, senior investment strategist at BMO Global Asset Management.

As long as the economy continues to improve and interest-rate hikes are only gradual, analysts say stocks can maintain their lofty heights.

One key risk, Adams said, is that many of the encouraging data points from recent months have come from opinion surveys, such as confidence levels for consumers and purchasing managers. He’d like to see that optimism translate into more action by shoppers and businesses, whether that’s by spending or producing more, before getting more confident.

Airline stocks had some of the market’s biggest losses after the industry canceled thousands of flights in the face of fierce snowstorms. United Continental fell $3.30, or 4.7 percent, to $66.55, while rival Southwest Airlines lost $1.61, or 3 percent, to $52.88 and American Airlines Group dropped $1.16, or 2.7 percent, to $41.21 .

Valeant Pharmaceuticals fell $1.22, or 10.1 percent, to $10.89 after one of its biggest investors sold its entire stake in the company. Valeant’s stock has tumbled nearly 96 percent since its peak in the summer of 2015 because the company is facing more scrutiny for raising prices on its drugs. Activist investor Bill Ackman’s Pershing Square said Monday it has sold its investment Valeant.

Health care stocks held relatively steady overall amid increased expectations that the Republican proposal to overhaul the Affordable Care Act is unlikely to pass in its current form. The sector fell 0.3 percent.

The nonpartisan Congressional Budget Office said late Monday that the Republican proposal would result in 24 million more uninsured people over a decade, while trimming the federal deficit by $337 billion.

In the currency market, the British pound fell against the dollar after Parliament gave its prime minister the authority to divorce Britain from the European Union. Scotland’s first minister, meanwhile, called for a referendum to break free of the United Kingdom.

The pound fell to $1.2145 from $1.2231 late Monday. The euro fell to $1.0632 from $1.0660, and the dollar dipped to 114.72 Japanese yen from 114.77 yen.

In Europe, Germany’s DAX stock index was close to flat, while the U.K.’s FTSE 100 slipped 0.1 percent and the French CAC 40 lost 0.4 percent. In Asia, Japan’s Nikkei 225 stock index dipped 0.1 percent, South Korea’s Kospi rose 0.8 percent and the Hang Seng in Honk Kong was close to flat.